The Property Franchise Group has issued a trading statement that is upbeat on lettings but warns that the sales market has “softened further” in the second half of 2019.
Bournemouth-based TPFG has six agency brands - national lettings service Martin & Co, west country agency CJ Hole, London operation Ellis & Co, plus Whitegates serving the Midlands and north of England and Parkers operating along the M4 corridor; there is also Ewemove, the online agency which has some physical offices too.
In recent trading statements TPFG has been extravagant in its reassurances over the success of Ewemove in particular, but there is no explicit mention of the online service at all in the group’s latest message to shareholders.
Nor are any details given of the group’s sales performance. Instead, the statement majors almost wholly on lettings, where last month the group set a new record for revenue.
“Our franchisees reported lettings income of £5.96m. Significantly, this was achieved despite the loss of tenant fee income, following the ban on charging tenant fees having come into effect in England & Wales on 1 June 2019. Tenant fees had previously represented 16 per cent of our franchisees' lettings revenue in these jurisdictions” reads the statement.
The the individual branches managed to mitigate the financial impact of the ban “is a clear demonstration of the benefits of the franchise business model.”
Instead, the recurring monthly fees charged to landlords for property management services has increased 10 per cent year on year from £3.88m in October 2018 to £4.28m in October 2019.
“The group believes it is the high level of satisfaction of its landlord clients that lies behind its better than expected progress in shifting the burden of cost from tenants to landlords, as clients of its franchisees would rather retain their services than do it themselves or instruct another agent” says TPFG.
The company says the effects of the ban will now be fully mitigated by June 2020 - six months ahead of schedule.
“Our ability to draw on our wealth of industry experience and act quickly to support our franchisee members provides us with a clear advantage in the market. At a challenging time for the industry, where many independent lettings agencies are considering leaving the sector, our group continues to show its strength” explains Ian Wilson, chief executive officer.
“The sales market has softened further in the second half, however our lettings business is outperforming our budgeted expectations. Our franchise business model has proven to be remarkably resilient in these testing conditions and we expect this to continue."